The reduction in Yes Bank’s 21,000-strong workforce marks the second recent cut in India’s private-sector banking space. HDFC Bank, the country’s most valuable lender by market capitalisation, has trimmed its workforce by about 11,000 over three quarters to March 2017.

“As part of the bank’s regular human capital management practices, to ensure higher productivity and improved efficiencies, the bank undertakes some performance-linked actions on a periodic basis,” Yes Bank said in an e-mailed response. “We have a process of identifying bottom performers every year as part of our normal appraisal cycle. These actions are not any different from those being pursued by other leading private sector banks.”

Separately, the bank referred to a natural attrition rate in line with the industry average, and included staff from the frontline sales force. The Indian banking industry has an annual attrition rate of 16-22%.

Bank insiders said the lender will continue to cut jobs to reduce redundancy, simultaneously attracting top talent that it will need from top campuses and laterally from peer banks for key growth functions. At the end of June, total headcount was 20,851.

“The bank’s digital transformation exercise is also underway, with a greater degree of automation and digitisation, aimed at better productivity and cost efficiency, and customer service,” the bank said. “This will additionally aid in rationalising some redundancies. It will be our constant endeavour to further digitise the bank operations.”

This move caught many by surprise after a recent letter by the bank’s chief Rana Kapoor to senior management had talked about increasing the branch network to 1,800 from the existing 1,020 centres.

“The greatest threat that the banking sector is facing is obsolescence risk of all physical assets like branches, ATMs, cards, point of sale terminals etc. Hence, our expansion must be prudent and under control,” Kapoor wrote in an email to his top management.

“We will invest in agile capacity building as our branches will get leaner, meaner and fitter through specialised formats-.”With a greater degree of automation in banking, lenders are increasingly turning to robots and algorithms to improve efficiencies and reduce human intervention in operations.

“ We have seen an increase in digital transactions which has given us certain efficiencies linked to the digital channel,” Paresh Sukthankar, deputy managing director at HDFC Bank, had told ET in April this year. “We have not replaced the staff which has moved out due to attrition and have rebalanced our capabilities due to the increase in digital transactions.”

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